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Backdoor Investing: A Safer Way to Speculate

Unless you’ve been hiding under a rock, you’ve likely heard about the rapidly expanding cannabis industry. It seems nearly every major website has been posting about either cannabis regulation, a new IPO, or some new product. Well, we’ve been getting a lot of questions about which cannabis stocks to invest in and our answer may surprise you.

While there are cannabis stocks we recommend investing in directly, we’re going to show you a quick and easy way to buy these companies in a much safer way. Simply put, you don’t buy the cannabis stocks… you buy the stocks of the companies that buy the risky stocks. You’ve probably seen at least one or two articles about companies investing in the cannabis industry. Cigarette companies, liquor companies, even a few financial companies (if you’ve got a good eye). Here’s the thing… Those big bastards have WAY more investment savvy than you do. They’ve got analysts who do the real work. There’s no reason for you to have to dig as much when a multi-billion dollar company has already done it.

Example:

Recently, Constellation Brands (STZ, the booze company behind Corona and Modelo beer, Svedka vodka, etc ) made a multi-billion dollar bet on the cannabis company Canopy Growth (CGC). Who do you think has a better idea on a good bet for a weed stock? You or a $42 billion company booze company. So what do you do with that? You can buy STZ if you want to buy CGC. You are getting a huge name brand company as well as a stake in a cannabis company trying to find its footing. If Canopy growth goes bust, you’ve only lost a small amount. If you buy Constellation, you’re getting world-class liquor and beer brands that already pay a dividend as WELL as a portion of Canopy growth. When you’re buying in a retirement account and don’t have to many years until retirement, it may not be a good bet to buy something without a track record (ie cannabis industry stocks). But the big guys who are speculating probably aren’t going to get even close to busting out like some new stock of the day.

So how do you know where to find backdoor stocks? Simple.

  1. Go to Whalewisdom.com. This site shows you 13-F filings (ie who owns what of the big boys on Wall Street)
  2. Enter in the symbol of the stock you want to buy that may be a bit risky or new.
  3. In this case, we’ll just use Canopy Growth (CGC)
  4. Sort the list by % of portfolio.
  5. Big company investments will be at the top of the list. You see here that the 2 biggest holders (whose portfolios are 100% invested in Canopy)cgc investors
  6. Now we Google who the hell those companies are. A simple search shows that  BOTH holding companies are owned by Constellation brands. The first search of CBG Holdings LLC has the first result showing this ownership.constellation investment
  7. The only thing left to do now is decide if you like Constellation Brands, which is  about 4x as big as CGC and already has cemented brands and a helluva distribution network

THAT’S IT! Try it with some new companies and see if you can find some bigger, safer ways to use to backdoor invest in new ideas. Weed stocks, Chinese stocks, new tech stocks.

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